From 2022, a new way of calculating taxes will affect all resales, donations and inheritances in Spain. If you are planning to buy a house in the near future or will receive any gift or inheritance in Spain, check your taxes beforehand to budget the transaction properly.
How is the transfer tax calculated now?
Until now, when a property is transferred, the buyers must pay transfer tax on the purchase price. The tax percentages vary from one region to another, being 6.5% de minimum and 11% the maximum.
How will the transfer tax be calculated in 2022?
However, from 2022 the corresponding tax percentage will be applied, not on the real price of the transaction as usual, but on a reference value (“valor de referencia”).
How will the reference value affect inheritance and gift taxes?
Likewise, regardless of the actual price of the property to receive as gift or inherit, the reference value will be used instead to calculate the taxes and apply the corresponding tax percentages.
How is the reference value calculated?
This value will be approved by the Dirección General del Catastro annually, based on the market price of the properties in each area.
To know the market price of each area, Catastro will seek the assistance of the Notaries all over the country, who will provide information of previous transactions carried out before them.
Will the reference value be accurate?
Although most times the market value could be quite close to the real purchase price, it won’t consider if the dwelling is renewed or not. This way, two properties of the same features, one renewed and another one not, will have the same value, even though their purchase price could be different.
This, of course, will be unfair to those people who purchase or inherit an old property which real market value is lower than the reference value and, to some extent, it might even be considered as unconstitutional.
What to do if the reference value is higher than the purchase price?
In those cases, the taxpayers will be forced to prove the real value of the property to the Tax Office by getting an official valuation, if they want to avoid paying higher taxes.
In effect this new system is formalizing the existing system we already have when we compare the taxable value to the market value. However now the authorities will be taking this a step further. Generally most market values are above the taxable values and it will only become a problem when the taxable value is greater. We will keep you updated as this new system is introduced.